Playtech Vies to Capitalize on Changing Scenery

The I-gaming industry has changed significantly in the last few years--a fact Elad Cohen hopes casino software developer Playtech can capitalize on.

Now in its sophomore year, Playtech is on the verge of doubling its number of licensees from three to six. Cohen, CEO of the company's marketing and research and development division, said a new software provider such as Playtech is in a good position to take market share from the industry's major software firms because the industry just isn't the same as it was three to five years ago when those companies made their names.

"The way we see it, today's industry is very vibrant, and many things are happening. It's really changing, and we think that a new company, has a very good opportunity if it can provide the current operators with a better product."

-Elad Cohen

"The way we see it," Cohen said, "today's industry is very vibrant, and many things are happening. It's really changing, and we think that a new company has a very good opportunity if it can provide the current operators with a better product.

"If you have many more features and basically, at the end of the line, better financial performance, that will make the difference in today's industry, which is not what it was five, four or three years ago."

For one thing, Cohen said, there are copiously more online gaming sites than there were in the industry's infancy. Margins are lower, he said, and the jackpots of revenue available to anyone with a gaming URL have disappeared.

"If you look at two years ago, if you had an online casino Web site, most of what you needed to do is just send traffic to the Web site. As long as you hit it with enough traffic, there would be a lot of money coming out the other side," he said. "Today it's not really that way anymore."

After spending a year developing its games, Playtech has been working with licensees for about 10 months, Cohen said. The company itself is truly international, with a Dutch mother company, management in Cyprus, operations in Antigua and marketing and R & D in Israel. Playtech is backed by an Israeli company called New Age Ventures.

Its corporate Web site boasts founders with experience in land-based casinos, although Cohen can't specify which land-based casinos, since they invested in the company through New Age Ventures to avoid regulation issues in Israel. Online gambling remains "absolutely forbidden" in the country, Cohen said, and as a result Playtech doesn't accept real-money bets from Israel.

"Having the ownership of the company be the majority Israeli shareholders--even though we are operating from Antigua--we cannot really accept bets from Israelis because that would make for Israelis making money from losses from Israelis, almost like operating a casino in Israel," Cohen said.

Playtech's licensees are Club Dice Casino, Brandy Casino and City Club Casino. The company's latest licensee, Swiss Casino, features the latest version of Playtech's software.

The company's business is really starting to take off, Cohen said. By the end of January, he expects three more Playtech-powered sites to debut, and by the end of the first quarter of 2002, he predicts the number of clients will increase to 15.

"These are all contracts that have been closed and people that we know that we're going to work with, and it looks very promising," he said. "2002 is going to be the year for Playtech."

Exactly what makes the firm's games attractive has partly to do with the platforms and back-office features available, he said. Playtech has signed contracts with both land-based operators looking to start an online venture as well as current operators who are switching software makers.

"It's not the same industry, and you cannot keep on making money with the same old platforms--you need more tools to work with," Cohen said.

The software's back end includes multi-level marketing tools that handle thematic player bonuses, player evaluations, promotions and tracking for both the games and the performance of the system. Right now the games are available in English, but next year more languages will be added. The platforms include download, Java and Shockwave, and the technology enables users to play using any of the platforms on the same account. If the client wants to make changes to the software, Cohen said, Playtech is quick to work with licensees to adapt the games to their site.

"We believe in working together with our licensees to create changes in the software, new features, whatever. They know better than us, we look at it like that," he said. "They are out there in the industry trying to make what they have to make, and if they need something that if they have it they can make more money, we can make more money."

Aside from the games, Playtech offers a useful tie-in for land-based casinos that desire to make a splash in the Internet gambling market. A division of Playtech serves land-based operators with casino software that supports magnetic card readers, prepaid cards and support for cashiers. When dealing with a bricks-and-mortar client, Cohen said, Playtech pitches the online package and the land-based package together, so that if the casino wants to develop an Internet version, its gaming floor games will look the same as its online software.

"People will be able to come into your casino, play on computers, play on some hardware-software integrated machine, get used to it within the casino walls," he said. "Then when they leave, why don't you give them the CD of the Internet version so they can continue playing what they just played at home?"